University of Queensland and Japanese scientists observed that mice lacking the Jmjd1a enzyme developed as females despite having a Y chromosome.
Professor Peter Koopman, from UQ's Institute for Molecular Bioscience, said the discovery provided new information on the earliest steps the body takes in becoming male or female.
"Most mammals, including humans and mice, are programmed to develop as females unless a specific Y-chromosome gene called Sry is present to trigger male development during embryonic life," Koopman said.
"It's as if the DNA is a ball of string that needs to be unravelled by Jmjd1a to expose the Sry gene before it can be used. This latest discovery has put the spotlight on DNA packaging as a major determinant of the sex of the embryo.
"Fundamental discoveries like this bring us a step closer to controlling stem cell behaviour by activating or repressing certain genes," he said.
Intersex people are not biologically male or female but can have characteristics of both, researchers said.
The study was published in the journal Science.
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